Trading with point and figure

FTSE

w7g8rp.png
 
its in prev supp area on chart....that is rez
a break of lower trendline ..not good for bulls


we could be manipualting upwards...ready for a dump..poss after NFP

Dead cat bounces= fakes...we watch for unsupported rallies
 
- Digesting solid China NBS PMIs, strong Korea Production, disappointing
Oz Q1 CapEx and Japan Production; awaiting UK Credit/Mortgage data,
Eurozone CPI, US Personal Income / PCE, Jobless Claims, Pending Home
Sales, India and Canada Q1 GDP; politics and trade tensions still cast
a long shadow

- Eurozone CPI: national data point to much larger than expected surge,
headline and core CPI likely to post strongest gains since Q1 2013

- UK Consumer Credit: mirroring Retail Sales, reversion to prior levels
expected, though pace of growth still needs to slow sharply moving
forward

- Canada Q1 GDP: Bank of Canada optimism imparts upside risk to forecast

- US Personal Income/PCE: as ever likely to mirror Average Hously Earnings
and Retail Sales, deflators seen around Fed target

- US Chicago PMI: expected to edge up after April drop, Beige Book comments
on very strong manufacturing sector impart upside risks, as well as
questioning wisdom of Steel and Aluminium tariffs

- Charts: China NBS Manufacturing PMI, WTI and Shanghai Crude

..........................................................................

********************
** EVENTS PREVIEW **
********************

The final day of the month is as ever replete with statistical releases from around the world, has a few Fed speakers and the start of a meeting of G7 Finance Ministers and central bankers, though whether these can unseat the numerous political themes is debatable. It is also the Corpus Christi holiday in a number of countries in Europe, Catholic states in Germany (Fronleichnam) and Brazil. Statistically there are the array of the China NBS PMIs (very solid), Japan (disappointing) & South Korea (much better than expected) Industrial Production, Australian Q1 CapEx (soft) and UK confidence surveys (improving) to digest ahead of Eurozone CPI, UK Consumer Credit and other monetary aggregates and Indian Q1 GDP. The afternoon has US Personal Income/PCE. weekly jobless claims, Pending Home Sales and Chicago PMI to accompany Canada's Q1 GDP, which given the optimism evident in the BoC statement yesterday may well beat forecasts of 1.8% SAAR. Eminently all of this will play second fiddle with the US/China, US/EU Trade tensions, and the Italian and Spanish political dramas. As the Trump regime moves to impose Steel and Aluminium tariffs on the EU and others, the observation that this looks to be akin to a deliberate desire to derail the US economy seems unavoidable, when one looks at the latest Fed Beige Book comments on the Manufacturing sector. "Manufacturing shifted into higher gear with more than half of the Districts reporting a pickup in industrial activity and a third of the Districts classifying activity as "strong." Fabricated metals, heavy industrial machinery, and electronics equipment were noted as areas of strength. Rising goods production led to higher freight volumes for transportation firms."

** Eurozone - May CPI **
- Given that German (2.2% y/y f'cast 1.8%, April 1.4%), Portuguese (1.4% y/y f'cast 0.8%, April 0.3%)and Spanish (2.1% y/y f'cast 1.7%, April 1.1%) HICP readings were well above forecasts, it is safe to assume that the Eurozone reading will easily beat the consensus 1.6%, quite possibly reaching 2.0% for the first time since January 2013. Eminently this outturn owes much to the actual rise in food & energy prices and the adverse base effects in both, as such the key point of focus will be the extent to which rising services prices help to give core CPI a boost, with the consensus looking for 1.0% y/y from April's 0.7%, though a reading in the region of 1.3/1.4% now looks more likely. While such an outturn for the latter would still be considerably below 2.0%, it would be the highest since reading in Q1 2013. ECB speakers have been keen to stress in recent weeks that the April readings were an aberration, and that they remain confident that inflation is heading back to target, which this would appear to confirm.

** U.K. - April Consumer Credit **
- While on the topic of aberrations, today's Consumer Credit data are expected to signal (as the Retail Sales did) that the sharp drop in Consumer Credit in March (£254 Mln) was also a function of weather and Easter timing effects, with the consensus looking for a move back to £1.3 Bln. Though that would underline that credit growth is still running at a pace, which is not sustainable given sluggish wage growth. The accompanying Mortgage Lending data are expected to show Secured Lending little changed at £3.9 Bln, with Mortgage Approvals seen edging higher to a still quite subdued 63.5K.

** U.S.A. - April Personal Income / PCE **
- As a rule of thumb the headline Personal Income & PCE only rarely run counter to the prior reports on Average Hourly Earnings and Retail Sales, which predicate forecasts of 0.3% and 0.4% m/m respectively. There will as ever be more interest in the accompanying deflators, where the consensus looks for a headline rise of 0.2% m/m and unchanged 2.0% y/y, and mirroring CPI, the core measure is seen at 0.1% m/m, with the y/y dipping to 1.8% from 1.9%. The latter are however so close to the Fed's target as to be rather moot in terms of the policy outlook, with the very clear strength of the economy all too evident in yesterday's Beige Book. It would thus be a surprise (probably an aberration) if today's Chicago PMI was anything but strong, especially given those aforementioned Beige Book comments, details here: https://www.federalreserve.gov/monetarypolicy/beigebook201805.

from Marc Ostwald
 
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